Financial Overview

(in millions of JPY)

	FY2011	FY2010	Rate of Change (%)	Factors
Overall
Sales	676,903	604,548	12.0	-The Company was able to complete restoration work at its facilities and offices damaged by the great earthquake in a short period of time. It increased sales of fuel-efficient tires and other high value-added products, expanded capacity at its facilities overseas, improved productivity, and reduced expenses groupwide, which led to higher profitability.
Operating income	53,924	47,571	13.4
Ordinary income	49,927	42,478	17.5
Net income	28,386	21,427	32.5
Tire business
Sales	591,045	513,774	15.0	1)
Operating income	48,819	39,412	23.9

Factor
1)
- Sales increased at the OE tire division in Japan despite a significant drop in the vehicle production volume in the aftermath of the great earthquake in Japan and the heavy flooding in Thailand. The growth was achieved, as the Company expanded sales of fuel-efficient tires and other high value-added products, and revised its price structure to a new method under which it adjusts the prices of its products in accordance with changes in materials prices.

- Sales of OE tires increased outside Japan. Despite a temporal slowdown in global vehicle production in the aftermath of the great earthquake in Japan and the heavy flooding in Thailand, the Company was able to increase sales on the back of growing vehicle production in China and other countries. 

Development in Japan

-The Company announced that its Shirakawa Factory in Fukushima Prefecture, which had been shut down since the March 11 earthquake, resumed production on March 22. Having restarted making passenger car and light truck tires in limited sizes initially, the company is planning to resume output of truck and bus tires as well by the end of this week.  (From an article in the Nikkan Jidosha Shimbun on March 24, 2011)

Mid-term Business Plan

Financial targets for 2015

Sales	over 800 billion JPY
Operating profit margin	over 10%
Shareholders' equity ratio	40%
ROE	over 15%

Contracts

-Goodyear Japan announced that its “DuraGrip” tire was chosen as a standard factory-installed tire for the L-grade of the new Toyota “Aqua” hybrid. (From an article in the Nikkan Jidosha Shimbun on January 12, 2012)

-The Company said Dunlop's environmentally friendly tire "Enasave 01 A/S" was chosen by Mitsubishi Motors as a new car standard tire of its electric vehicle "i-MiEV" that had been recently put on the North American market.  (From an article in the Nikkan Jidosha Shimbun on December 5, 2011)
 
>>>Financial Forecast for the Next Fiscal Year(Sales, Operating Income etc.)

R&D Expenditure

(in millions of JPY)

	FY2011	FY2010	FY2009
Tire Division	16,771	16,253	14,896
Overall	19,273	18,697	17,982
Ratio of R&D expenses at Tire Division	87.0%	86.9%	82.8%

R&D Structure

-The Company is carrying out joint research with the Goodyear Tire and Rubber Company based on its ties with the U.S. tire supplier. Engineers of both companies work in teams for respective projects to exchange their technologies.
>>>Alliance with the Goodyear Tire and Rubber Company

R&D Facilities

Tire Proving Grounds

Okayama Tire Proving Ground Nayoro Tire Proving Ground Asahikawa Tire Proving Ground Golf Science Center

Product Development

- The Dunlop tire division developed and introduced a new rubber material by using the "4D Nano Design" technology, which contributes to reducing fuel consumption. It also adopted new tread patterns and profiles designed to improve driving safety and stability.

- The Goodyear tire division developed new products, which feature sophisticated, asymmetric tread patterns. The new design helps improve braking performance on wet road surface, while maintaining superior fuel efficiency and a high level of wear resistance. Also, adoption of a cross-ply structure for the carcass, which offers increased torsion stiffness, improved braking performance on a dry road surface, as well.

Capital Expenditure

(in millions of JPY)

	FY2011	FY2010	FY2009
Tire Business	45,777	28,165	29,379
Overall	48,515	32,055	32,483
Ratio of capital investment at Tire Division	94.4%	87.9%	90.4%

-The Company invested mainly in its tire business by increasing production capacities as well as reducing the number of employees needed. Targeted facilities include car tire production facilities in the Company's Nagoya Plant, Shirakawa Plant, Izumiohtsu Plant and Miyazaki Plant.

-The Company is planning to invest 59,010 million yen in plant and equipment in 2012. 

Investments Outside Japan

-The Company announced that it tire plant in Changshu, Jiangsu, China has produced an aggregate total of 50 million tires since it began production seven years ago in April 2004. The Changhsu facility was established in order to meet fast growing demand for tires in China. It has been gradually increasing its capacity in line with further rising requirements. Currently, the plant is capable of producing 6,000 tons of tires per month. Sumitomo Rubber is now building an additional plant in Hunan Province, which will serve as the company's second production base in China. (From an article in the Nikkan Jidosha Shimbun on July 15, 2011)

-The Company will establish a new subsidiary in Brazil to manufacture and sell tires for passenger vehicles. Sumitomo Rubber do Brasil Ltda. will be set up in Fazenda Rio Grande City, Parana State in July to address growing demand for tires in Brazil and other Central and South American countries. The company is investing approximately 560 million real (approximately 28 billion yen) in the project, planning operation launch in October 2013. The plant with a total land area of 500,000 square meters is expected to be able to produce 15,000 tires daily by the end 2016. The Brazilian subsidiary will be capitalized at about 80 million real (approximately 4 billion yen), which will be fully provided by Sumitomo Rubber. (From an article in the Nikkan Jidosha Shimbun on May 18, 2011)

Major Capital Investment Projects (Automotive Segment)

(As of Dec. 31, 2011)

Company name (Location)	Project	Estimated amount (million yen)	Project Period		Increases in production capacity (%)
			From	To
Sumitomo Rubber Industries Nagoya Plant (Aichi Pref., Japan)	Production equipment for automotive tires	6,503	Jan. 2011	Dec. 2012	3
Sumitomo Rubber Industries Shirakawa Plant (Fukushima Pref., Japan)	Production equipment for automotive tires	10,203	Jan. 2011	Dec. 2012	-
Sumitomo Rubber Industries Izumiotsu Plant (Osaka Pref., Japan)	Production equipment for automotive tires	1,883	Jan. 2011	Dec. 2012	-
Sumitomo Rubber Industries Miyazaki Plant (Miyazaki Pref., Japan)	Production equipment for automotive tires	7,113	Jan. 2011	Dec. 2012	-
P.T. Sumi Rubber Indonesia	Production equipment for automotive tires and golf balls	4,419	Jan. 2011	Dec. 2012	15
Sumitomo Rubber (Changshu) Co., Ltd. (Jiangsu Prov., China)	Production equipment for automotive tires	3,630	Jan. 2011	Dec. 2012	11
Sumitomo Rubber (Hunan) Co., Ltd. (Hunan Prov., China)	Production equipment for automotive tires	23,500	Sep. 2010	Dec. 2017	30,000 tires/day
Sumitomo Rubber (Thailand) Co., Ltd. (Rayong, Thailand)	Production equipment for automotive tires	37,148	Jan. 2011	Dec. 2012	88
Sumitomo Rubber do Brasil Ltda. (Parana, Brazil)	Production equipment for automotive tires	28,000	Jul. 2011	Dec. 2016	15,000 tires/day